Global Financial Strategy - Nout Wellink, Chair of Basel Committee on Banking Supervision

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Nout Wellink, Chair of Basel Committee on Banking Supervision

Wednesday 19 January 2011 – by Will Henley

Leading often fraught negotiations on the Basel III proposals for new banking requirements, which some thought might never be concluded, the Dutch central banker is credited with helping to lay the foundations of a new global regulatory architecture. He tops the GFS Power 50 for 2010.

Thanks in no small part to Nout Wellink, 2010 may well be remembered as the year that regulators finally got tough on reckless lending by financial institutions and, all being well, prevented a future crisis on the scale of 2007-8.

The President of De Nederlandsche Bank, with a comparatively low international profile next to the likes of Ben Bernanke, Angela Merkel and Barack Obama, tops this year’s list – compiled by GFS News – as the individual who has most influenced global financial regulation.

As chairman of the Basel Committee on Banking Supervision Wellink found himself in the eye of the storm as he was tasked with pushing through a new regulatory architecture for banking in the post-crisis world.

The game changing Basel III proposals, finally revealed in September after months of arduous negotiations, will force banks to buffer their reserves by holding greater top-quality capital, up from two per cent of risk-bearing assets to seven per cent.

The 67-year-old is credited with helping to hold the talks together despite intense lobbying from individual countries, banks and the financial services sector. Many institutions warned that the higher requirements could mean banks will have less capacity to lend to businesses. Several countries wanted complete exemptions from the rules.

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Many critics observe that the proposed capital ratios are still relatively low and fall short of higher standards demanded by analysts.

The Dutchman however stuck to the line that new requirements were necessary to ensure that the financial system is better prepared to prevent, or at least withstand, the effects of capital and liquidity shocks. Crucially, he was able to broker a compromise acceptable to both banks and tough talking regulators.

Though the final proposals were slimmed down from a harsher earlier version in order to incorporate a looser definition of top-quality tier-one capital, they hold out the prize of a level playing field that financial institutions have been demanding for years.

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